On May 8, 2012, hearings began before the Competition Tribunal (Tribunal) in the Visa/MasterCard price maintenance case. The case, filed by the Competition Bureau in late 2010, is the first civil price maintenance case to be heard by the Tribunal following amendments to the Competition Act in 2009 that included the repeal of former criminal price maintenance offences.
In brief, the Bureau is alleging that Visa and MasterCard merchant agreements discourage consumers from using lower-cost methods of payment (e.g., cash, debit cards, etc.) and prevent retailers from declining certain higher fee cards, which has led to an increase in card service fees paid by retailers and corresponding higher retail prices for goods and services.
Section 76 of the Competition Act now makes it a reviewable civil practice for a supplier to influence a customer or reseller to raise prices (or discourage the reduction of prices), including by agreement, where the conduct has an adverse effect on competition. While formerly a “per se” criminal offence with no competitive effects requirement, price maintenance is now a civil reviewable practice that allows the Tribunal to make remedial orders – for example, for conduct to stop or in some cases for supply to be resumed – where it is shown that competition has been adversely affected. Private parties may now also make price maintenance applications for Tribunal orders (with leave from the Tribunal).
Some of the restraints being challenged by the Bureau in this case include restrictions on merchants promoting or encouraging the use of credit cards with lower fees, discouraging the use (or refusing to accept) cards with higher fees and requirements to accept all Visa/MasterCard credit cards.
The Commissioner is seeking an order prohibiting Visa and MasterCard from enforcing agreements preventing merchants from encouraging the use of lower-cost payment methods, including rules preventing retailers from discouraging the use of higher-cost credit cards or refusing to accept certain Visa/MasterCard cards.
For more information about the hearings, pleadings and parties’ cases see:
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